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AFG
AFG
AFG - Afgem Limited - Announcement
Afgem Limited
("Afgem" or "the Company")
(Incorporated in the Republic of South Africa)
(Registration number 1998/007292/06)
JSE share code: AFG ISIN: ZAE000067757
Announcement
Afgem shareholders are advised that on 12 June 2007 the Company was served with
court papers wherein Rex Mining Corporation Limited ("RMCL") and Rex Diamond
Mining Corporation ("RDMC") (collectively "Rex") have made an application to the
High Court of South Africa (Witwatersrand Local Division) for a final
liquidation order to be granted for the winding up of Afgem, based on the
following allegations:
1. Afgem is unable to pay its debts;
2. Afgem`s liabilities substantially exceed its assets;
3. Afgem does not have the necessary cash on hand or current assets to pay its
trade creditors or any of its creditors; and
4. Afgem is both commercially insolvent in that it is unable to pay its debts
as well as being insolvent in that its liabilities exceed its assets.
Afgem disputes the allegations made by Rex. Afgem`s assets exceed its
liabilities and Afgem and Simolotse Mine (Pty) Ltd ("Simolotse") are in
communication with creditors and are negotiating terms of settlement of debt.
These allegations are baseless as Rex does not have representation on the board
of Afgem and does not have first hand knowledge of the affairs of the Company.
Afgem wishes to draw shareholders` attention to the fact that RMCL owes Afgem
approximately R8.5 million. Afgem obtained a judgement for R1.5 million of the
amount owing plus interest thereon in 2006 and RMCL have appealed the decision.
Afgem is expediting the hearing of the application for leave to appeal, since
RMCL appears to not be progressing their application for leave to appeal. Should
the appeal decision be in Afgem`s favour, RMCL will be obliged to pay Afgem R1.5
million plus interest thereon from November 2005. Afgem has security from RMCL
to cover this debt owing to Afgem in the form of 20 000 000 Afgem shares pledged
to Afgem by RMCL.
Shareholders are referred to the announcement made on 4 June 2007 whereby Afgem
signed a sale agreement for the sale of its interest in Simolotse and Afgem
Diamonds (Pty) Ltd ("Afgem Diamonds") to Meepo Investment Corporation (Pty) Ltd
("Meepo"). In terms of the agreement Afgem received R2 million in cash on 31 May
2007 from Meepo. Afgem has funding to facilitate its day to day operations and
creditors are being paid from the cash resources. Furthermore, R7 million of the
creditors of Simolotse are being assumed by Meepo.
Accordingly, Afgem is in the process of preparing its notice of opposition to
the application of Rex and, as per the JSE Limited`s Listing Requirements and
the Securities Regulation Code and Rules of the Securities Regulation Panel, a
circular to approve the sale of Simolotse and Afgem Diamonds will be sent to
shareholders. Once the transaction for the sale has become unconditional, Afgem
will receive a further cash payment of R3,2 million, enabling it to pay the
South African Revenue Services and other creditors of the Company.
Afgem will publish its annual financial results before the end of June 2007,
from which shareholders will be able to make an informed decision on the
financial status of the Company.
A further announcement will be made in due course as to the progress made in
opposing the application by Rex.
Melrose Arch
14 June 2007
Sponsor
Sansara Independent Sponsor Services (Pty) Limited
Date: 14/06/2007 12:08:01 Produced by the JSE SENS Department.
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